the grocer says...

Much of the commentary around the relationship between grocer and supplier has focussed on the supermarkets squeezing unreasonable terms from under-pressure manufacturers. But this is not necessarily the case.

A quarter of Scots supermarket booze to be hit by 50p minimum

Supermarkets will need to put up the price of at least 25% of all alcoholic drinks for sale under the Scottish government’s plans for a 50p minimum unit alcohol price, The Grocer can reveal.

An analysis of 1,510 beer, cider and spirit drinks on sale at Tesco, Sainsbury’s and Asda in Scotland on Tuesday revealed that 25.2% were sold for less than 50p per unit [BrandView.co.uk 15 May 2012].

Minimum pricing would hit beer and cider hardest, with 29.2% of products sold under the threshold compared with 22.2% of spirits on sale this week. Asda sold 35% of beer and cider SKUs for under 50p per unit. At Tesco, the figure was 29% and at Sainsbury’s 23%.

Scottish health secretary Nicola Sturgeon announced the minimum unit price of 50p on Monday. “Cheap alcohol comes at a price and now is the time to tackle the toll that Scotland’s unhealthy relationship with alcohol is taking,” she said.

“It’s no coincidence that as affordability has increased, alcohol-related hospital admissions have quadrupled. It’s time for this to stop.”

If Holyrood votes through the bill later this month, minimum pricing could become a reality north of the border as soon as April 2013.

Supermarkets now face a dilemma about how to deal with the tranche of products that fall below minimum pricing.

A 700ml bottle of Tesco Value vodka, would, for example, increase from £8.72 to £13.13 - and the price of leading brands would also go up. A litre of premium Smirnoff Red Label, which is regularly on deal for between £14 and £17, would cost at least £18.75.

“We now have to decide whether we inflate the base price of premium brands to give customers the same percentage saving when the product is on deal, or do we have an EDLP offer?” said one senior supermarket source.

A Sainsbury’s spokesman said the study did not represent its pricing on beer and cider in Scotland because it was only a week’s worth of data. “Once you exclude promotions, the number of Sainsbury’s SKUs impacted by a 50p minimum price falls to just 13%,” he said.

Readers' comments (1)

Clive | 18 May 2012

Those border roads are going to get VERY busy! It's not actually addressing the actual problem - but a good revenue earner!! Bit like the plastic bags - Politically wonderful!!